When Lending Kills: The World Bank and Guatemala

The tragic, horrifying events in Connecticut last month serve as a heartbreaking reminder of the value of human life. They have also provoked a national conversation around a host of issues related to the shooting, from gun control to mental illness. At the heart of this conversation is the question of what we – as people, as institutions, as a society – can do to prevent similar tragedies in the future. It is a powerful question without easy answers and by asking it we recognize our collective responsibility to each other as human beings. The story of the Chixoy Dam in Guatemala is a reminder of what happens when that responsibility is neglected.

In 1954, Guatemala’s democratically elected government was overthrown by a military coup backed by American intelligence and corporate interests. The military dictatorship that took over waged total war on dissenting groups and ethnic minorities, killing or “disappearing” an estimated 200,000 people over the next several decades.[1] The violence of Guatemala’s government was hardly a secret, particularly in the United States, the primary benefactor of the murderous Guatemalan regime. The U.S., particularly the Central Intelligence Agency, and Israel armed and trained Guatemalan soldiers and actively supported the campaign of terror against “communists,” who largely happened to be poor indigenous peasants. The mass killings were so commonly known that Jimmy Carter cut off American aid to Guatemala in the late 1970s; Amnesty International also released reports on killings in the early 1980s.

It is in this context that the World Bank lent money to Guatemala; multi-lateral institutions were responsible for roughly 60% of the hundreds of millions of dollars borrowed by the violent junta in the late 1970s and early 1980s.[2] This loan money was surely put to many uses, but also undoubtedly contributed to the longevity of the dictatorship and prolonged the suffering of Guatemala’s people. It is exactly this type of lending that calls into question the validity of much of the Global South’s current debt burden, and strengthens the moral impetus for the type of debt relief called for by organizations such as Jubilee USA Network.

One loan in particular, however, stands out. In 1982, Guatemala borrowed 400 million dollars from the World Bank and the Inter-American Bank to finance a hydro-electric project called the Chixoy Dam.[3] The project required the displacement of a number of rural communities (exactly the type of constituencies which were already the target of government violence), and when those communities protested dam construction, the regime responded with typical brutality. In all, four hundred people were massacred, including one horrific mass killing in which “70 women and 107 children were massacred, many after being repeatedly raped and tortured.”[4] Subsequently, various reports have demonstrated that the World Bank should have known about the massacres after they happened and it is highly unlikely that the dam could have proceeded without World Bank assistance. Furthermore, the World Bank granted additional loans four years later to construct a related project in the same area.

Thirty years later, the communities victimized by this crime have not been compensated. On the contrary, Guatemala’s people are still being asked to pay back the loans that funded this fatal project, a situation that evokes the “wasted bullet” tax that Ethiopian dictator Mengistu Haile Mariam’s government charged the relatives of execution victims when they came to collect their relatives’ bodies. That money is flowing from Guatemala to the coffers of the World Bank as a result of the events at Chixoy Dam is perhaps the best evidence that something is deeply, deeply wrong with the international system of finance and lending.

All of which brings us back to Connecticut and the responsibility we have to try to prevent these types of crimes in the first place. Surely there are steps we can take to reduce the likelihood of such violence, both in our communities and on a national or international scale. But above all else, shouldn’t society’s first goal be to not enable or assist such acts of violence? What happened in Guatemala is particularly unforgivable because of the role played by a prominent third party that should have known better. On a fundamental level, it should not come as a surprise that murderous people decided to use murder to achieve other ends. It should not come as a surprise that bad things happen when violent governments are given money.

Just as all the positive action in the world will never completely eradicate shootings like the one in Newtown, halting western support of murderous governments will not eliminate the type of massacres visited upon the Rio Negro region of Guatemala in 1982. As President Obama said in Newtown, however, “that can’t be an excuse for inaction. Surely we can do better than this.”[5] Western creditors must stop loaning money to regimes that kill their own people. Countries victimized by such loans in the past must not be forced to repay the debts that were incurred at their expense. After all, every child deserves a life free from violence and fear. Everychild.

About Me

I am a graduate of the University of San Francisco's master's in International Studies Program, where I wrote my thesis on Odious Debt in Sub-Saharan Africa. This site will focus on African issues, particularly debt, politics, and U.S. foreign policy. I hope you find it interesting.
email: andrew.hanauer@gmail.com